Bankruptcy in Mackay is a difficult process, but I realise from meeting with thousands dealing with the chance of bankruptcy for many years that the most terrifying element is the distress of losing the family house.
Nearly everyone is on an emotional level attached to their home – it’s where the children have grown, it’s where you sleep, eat, unwind and built it from a house to a home. So it is terrifying to believe that something like personal bankruptcy can sweep in and take all that away from you.
So, Could you lose your home if you go bankrupt?
My response is ‘possibly’– I understand it is not an useful reply, but it is going to really depend upon your unique circumstances. People normally think that losing your house is inevitable and just another part of Bankruptcy– but don’t drive yourself mad right now, as there could be hope.
So how does personal bankruptcy view my house?
The very first thing to recognize is that properties are deemed assets– but no two homes will be the same. What you really should grasp is that whenever it comes to Bankruptcy, they designate a trustee to oversee the procedure. Their task is to make certain that they can pay off as many of your financial debts with your asset. This is completed via equity– and if there is no equity in your home then there certainly is no real benefit to selling it.
Trustees not selling residential properties is occurring considerably more since the GFC as house prices in many areas have been going south so what you spent 4 years ago may not immediately demonstrate the price nowadays.
But the most significant part with Mackay and Bankruptcy is that you really need to get an expert to help you with this procedure, there are plenty of factors in these scenarios that ought to be considered.
As an example, if you have no equity in your home you need to consider your home loan. With loans, you are essentially just a client of the financial institution and they will similarly have a preference– will they wish to take your house back, or do they prefer you to keep the loan? You might believe that they would wish to just take your home to steer clear of the risk, but frankly financial institutions are run as a business, and if they can leave you with a mortgage to keep generating income off you, they generally will provided that you keep up to date with your repayments. But it is nonetheless up to the trustee to determine that there is a lot of equity in your house the trustee will force you and the bank to sell the house.
What is my house worth?
Typically with Bankruptcy it is difficult to know what your home is really worth– yes, you may have an idea if you were selling your house, but the manner in which this is worked out in bankruptcy is usually different. When you declare bankruptcy you will need to note down the value of your home, and the amount of money that you owe– and you can work this out by using a valuer. Doing this is going to be much more accurate than applying your ‘gut feel’ or a real estate agent. The other important factor is that you need to ask your valuer for two valuations– one for a Quick Sale, and one for a non-time sensitive sale. This will certainly give you 2 realistic numbers that can help you to effectively value the residential property and appreciate its worth even when you are being pressed to sell promptly.
When it comes to Bankruptcy and properties, another significant consideration is ownership, in a lot of cases houses are purchased in joint names. In other words a couple may have bought a house 50/50 using both incomes to make the repayments. If one party declares bankruptcy and the other party does not, the equity is only factored on the 50 % of the home. With Bankruptcy, this is merely one of undoubtedly various circumstances that are probable when it relates to the family home. Remember the non-bankrupt party can purchase the bankrupt’s part of the home in insolvency too. I must repeat this but get some advice on this area of Bankruptcy because it is very complicated and every case is different.
If you really want to find out more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to reach out to Bankruptcy Experts Mackay on 1300 795 575, or visit our website: www.bankruptcyexpertsmackay.com.au.